Today’s Outlook:
US MARKETS: US Treasury yield briefly went above the psychological 4.0% level before closing down slightly to 3.937%. The movement in the US Treasury yield is believed to represent investors’ expectations regarding the projected cut in US interest rates this year; which in turn provided negative sentiment to Tech stocks that prefer a low interest rate environment. Several important economic data will be of interest this week are: The Fed’s December Meeting Minutes, and the employment report will complement the S&P Global US Manufacturing PMI (Dec.), which is still stuck in contraction territory. Likewise, the Eurozone & UK region where Manufacturing PMI (Dec.) is still fragile in contraction territory. Later tonight at around 22:00 GMT, the ISM Manufacturing PMI (Dec.) and JOLTs Job Openings (Nov.) data from the US will be released, providing crucial data to see if the effect of the Fed’s tight monetary policy on the US economy can be considered as soft-landing and justify this year’s projected pivot.

ASIA MARKETS: Good news from CHINA: Caixin Manufacturing PMI (Dec.) strengthened further to 50.8, beating expectations & the previous period; while South Korea barely stayed on the expansionary border by slipping to 49.9.

INDONESIA: Inflation (Dec.) successfully eased to 2.61% yoy, lower than the estimated 2.72% and the previous month’s 2.86%. Core Inflation was cooler at 1.80% yoy, lower than 1.85% forecast and November’s 1.87%. JCI responded by surging 50.8 points to 7323.6, a fresh new high in early 2024, one step away from reaching the ALL TIME HIGH area of 7355-7377 despite the shadow of RSI negative divergence. NHKSI RESEARCH advises investors/traders to pay attention to market interest once the Target level is reached, in anticipation of a possible pullback/consolidation. COMMODITIES: OIL prices closed on the red during the first day of trading in 2024 as expectations of interest rate cuts loom and fears of a Red Sea attack are erased. Brent oil closed 1.5% lower at USD 75.89/barrel, while US West Texas Intermediate shed 1.8% to USD 70.38/barrel. Prices fell as traders scaled back over-expectations of a US interest rate cut in 2024. A rate cut would indeed reduce consumer borrowing costs, ultimately boosting economic growth and global oil demand. The US Dollar also strengthened on Tuesday, while stock prices consolidated, further pressuring Oil prices lower. A stronger dollar makes Oil more expensive for non-US buyers. Oil prices had risen around USD 2 in previous trading, following an attack on a ship in the Red Sea by Houthi rebels at the weekend, and reports of an Iranian warship arrival on Monday. Thus, traders are evaluating the market situation, where there are no significant supply disruptions and it is unlikely that Iranian warships will be involved in clashes with American warships.

Last Sunday, US helicopters repelled an attack by Houthi militants (backed by Iran) on a container ship operated by Maersk – Denmark in the Red Sea. On Monday, an Iranian warship entered the Red Sea, according to the semi-official Tasnim news agency. Shipping companies Maersk of Denmark and rival Hapag-Lloyd of Germany say their container ships will still avoid the Red Sea lane that gives access to the Suez Canal. A wider conflict could close sea lanes, which are crucial for oil transportation. A Reuters survey of economists and analysts expects Brent crude oil prices to average USD 82.56/barrel this year, up slightly from the 2023 average of USD 82.17/barrel, with weak global growth expected to limit demand; but on the other hand, geopolitical tensions could boost prices. In China, investor expectations of economic stimulus measures increased after manufacturing activity shrank in December for the third month. Any glimmer of stimulus could boost demand for oil and support crude prices. Separately, OPEC+ plans to hold a Joint Ministerial Monitoring Committee (JMMC) meeting in early February, although the exact date is yet to be decided. 

Corporate News
Danareksa Prepares IDR 1 Trillion Bonds, 3 Coupons to Check SOE PT Danareksa (Persero) held an offering of Danareksa Bond VII Year 2023 worth IDR 1 trillion, consisting of 3 series. Based on a brief prospectus published on Bisnis Indonesia Daily, Tuesday (2/1/2024), Danareksa’s bonds are divided into three series. Series A bonds with a principal of IDR 380 billion have a fixed interest rate of 7.10% and a period of 370 days from the date of issuance. Series B bonds with a principal of IDR 520 billion at a fixed interest rate of 7.70% and a 3-year term from the date of issuance. Series C Bonds with a principal of IDR 100 billion at a fixed interest rate of 7.85% and a 5-year term from the date of issuance. The first bond interest payment will be made on April 9, 2024, while the last bond interest as well as the maturity of each series is February 19, 2025 for series A bonds, January 9, 2027 for series B bonds, and January 9, 2029 for series C bonds. 50% of the proceeds from this bond will be used to pay off all and part of the principal of banking debt. Some funds will also be used for loans to Danareksa’s subsidiaries. (Bisnis)

Domestic Issue
Government Auctions Initial 2024 Notes Today, Target to Raise IDR 37.5 Trillion Through the Directorate General of Financing and Risk Management of the Ministry of Finance (DJPPR Kemenkeu), the government will auction seven series of government bonds (SUN) today (3/1/2024). This is the first SUN auction in 2024. “The government will conduct a rupiah-denominated SUN auction to fulfill part of the financing target in the 2024 State Budget,” quoted an official statement from the Ministry of Finance’s DJPPR, Jakarta, Wednesday. The auction will last for two hours, starting at 09.00 WIB and closing at 11.00 WIB. Settlement date is January 5, 2024. “The indicative target (SUN auction) is IDR 25 trillion, while the maximum target is IDR 37.5 trillion,” he said. The following series of debt securities will be auctioned: SPN03240404 due April 4, 2024, discount coupon; SPN12250103 due January 3, 2024, discount coupon; FR0101 due April 15, 2029, coupon 6.875 percent; FR0100 due February 15, 2034, coupon 6.785 percent; FR0098 due June 15, 2038, coupon 7.125 percent; FR0097 due June 15, 2043, coupon 7.125 percent; FR0102 due July 15, 2054, fixed interest coupon and will be set on January 3, 2024. (IDX Channel)

US10YT has an upper channel breakout attempt, which is about to break the downtrend if the yield manages to close above MA20 Resistance / 3.965% yield. ADVISE: BUY ON BREAK; or AVERAGE UP accordingly. Target: around 4.27% yield.

ID10YT showed a rebound reaction after approaching the bottom target area around 6.465% yield, where it has now broken the first Resistance / MA10 at 6.513% yield. The second resistance of this technical rebound series is testing MA20 / yield 6.571%, which if it can be broken, it will make ID10YT yield go higher to the upper wedge (blue) target around 6.65%. ADVISE: SPECULATIVE BUY; AVERAGE UP accordingly.

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